1. ThecityofCharlestonhadthefollowingsalesofwaterfortheselectedmonthsof2017:

Month

Sales

February

$50,000

March

45,000

April

60,000

May

42,500

June

70,000

July

120,000

Allsalesareoncredit.Historically,50percentiscollectedinthemonthofsale,35percentduringthefirstmonthfollowingthesale,and15percentinthesecondmonthfollowingthesale.

Waterpurchases by month are as follows:

Month

Sales

February

$37,500

March

33,750

April

45,000

May

31,875

June

52,500

July

90,000

Waterispurchasedinthemonthofsale.Allpurchasesarepaidduringthemonthfollowingthepurchase.

Operatingcostsare$18,000and everything is paid in cash except for depreciation, which totals $8,000 a month.

The city plans on purchasing some new equipment in May for $25,000 in exchange for a note payable.

TheApril1cashbalanceisexpectedtobe$5,000.

The city must maintain a minimum cash balance of $10,000, and moneycanbeborrowedfromalocalbankinincrementsof$1,000.The city borrows money ant the beginning on the first day of the month and repays loans and interest on the last day of the month.The bank charges the city an annual interest rate of 15%.

Required:

PrepareacashbudgetforApril,May,andJune, and based on your answer complete the following table:

April

May

June

Quarter

Beginning Cash Balance

$5,000

$14,500

$10,500

$5,000

Cash Collections

$

$

$

$

Water disbursements

$()

$()

$()

$()

Operating Costs

$()

$()

$()

$()

Borrowings

$

$

$

$

Repayments

$

$

$

$

Interest

$

$

$

$

Ending cash balance

$14,500

$10,500

$25,450

$25,450